Education The best performing stock market on Earth over the last 120 years

And the gold medal goes to...you better watch it and it's not the US stock market



Cheers,
Oracle.

 

Interesting. I assume “in real terms” means after inflation 5.2%

 

Some of the main reasons why Aussie market has performed so well over the past several decades.

1) Population growth - Due to high immigration our population growth has been 2% whereas other developed nations the population growth hovers arounds 0.5%. More people means more demand, more hours worked, more goods produced etc which feeds into GDP growth.

2) Low cost producer of minerals. Being lowest cost producer for various resources mainly iron ore gives us an edge over rest of the world. Our miners can keep increasing production even if prices are lower and still make decent profit whereas other higher cost producing countries would have to make a loss or cease production.

3) Corporate governance and rule of law. This ensures investors get fair share of profits

4) Tax law. Dividend imputation system here encourages companies to pay higher share of profits to the investors and therefore have much less capital available to re-invest in the business. This creates much higher hurdle rate for management to take on new business ventures so only most profitable opportunities are pursued this allows for better return on invested capital.

Now watch the above in video format



Cheers,
Oracle.